Cardiff had arrived at Molineux having failed to win any of their previous 13 games.
But Byrne's 88th minute goal, in his first appearance after arriving from Shelbourne in a £100,000 deal, ensured that dismal run came to an end as Wolves slipped to their second defeat in four games.
Byrne had struck after Wolves had looked set to salvage a point when Seyi Olofinjana had cancelled out a sublime opener by Michael Chopra.
The victory was extra sweet for Cardiff as their fans had been banned from the clash following crowd problems at Molineux in the previous two games between the sides.
Cardiff chairman Peter Ridsdale made his feelings clear about the ban as he turned his back on the comfort of the director's box to sit in the dug-out.
While Cardiff had threatened in the opening three minutes when Chopra shot wide, they had to survive a major scare before breaking the deadlock.
Craig Davies had his close-range shot beaten away before the Welsh international striker mis-hit a drive from just 12 yards.
When Michael McIndoe then missed the target as well when perfectly placed, Cardiff took full advantage - and in some style.
It was a great piece of finishing by Chopra, who had been picked out by a long throughball from Joe Ledley, before lobbing the ball over goalkeeper Matt Murray to score his and Cardiff's first goal since the game against Plymouth on Boxing Day.
Three times at the start of the second half Chopra was denied a second goal. Twice he was frustrated by Murray before the woodwork then came to the rescue of Wolves.
Olofinjana himself also hit the post from close range - but he made amends just 60 seconds later when he fired Wolves level.
His goal owed everything to the direct play of Michael Kightly who surged into the area with a powerful run. He fed Craig Davies whose cross was tapped home by Olofinjana from four yards.
Drawing level sparked a spell of intense Wolves pressure that also saw Craig Davies hit the post and Neil Alexander pull off a stunning save from Kightly.
But Wolves' profligacy in front of goal proved to be their undoing as Chopra surged into the area and crossed for Byrne to tap into an empty net.